Who is ValueCap?

Finance Minister Datuk Seri Najib announced that the government is injecting an additional RM5 billion into ValueCap Sdn Bhd, arguably as a strong signal to investors that the market is severely under-valued. This was part of a wider package of economic stabilizing measures, the details of which will be revealed not too long from now on Nov 4.

It was established in October 2002 with a paid up capital of RM50 million. ValueCap was the brainchild of Second Finance Minister Tan Sri Nor Mohamed Yakcop with a sole purpose to invest in the Malaysian equities market. Its shareholders are Khazanah Nasional Bhd, Permodalan Nasional Bhd and the Pensions Trust Fund Council.

There is little public information on the stocks that ValueCap has invested in. Information on its investments is only known through annual reports of companies they have invested in. However, based on filings with the Companies Commission of Malaysia, ValueCap is very much in the black despite the bearish stock market.

As for returns to its shareholders, it has been reported that since its inception to September 2007, ValueCap had paid out a total of RM135 million in dividends. Nevertheless, based on industry information obtained, ValueCap is believed to have about RM4.9 billion worth of investments in 70 companies currently (Oct 2008). These companies are from a variety of segments and include the YTL Group, the IJM group, Malayan Banking Bhd, Hong Leong Bank Bhd, Public Bank Bhd, Tenaga Nasional Bhd, Malaysian Oxygen Bhd, Amway (M) Holdings Bhd and PLUS Expressways Bhd. The list also shows that Valuecap has interest in Real Estate Investment Trusts (REIT) such as Axis REIT and Quill Capital Trust REIT.

As of Dec 31, 2007 it had total assets worth RM7.56 billion and posted an after-tax profit of RM1.102 billion for the year against revenue of RM1.325 billion. It has retained earnings of some RM2.408 billion and had paid out dividends of RM50 million over that period.

The fund size has blossomed from RM5.1 billion to RM7.7 billion as at end 2007. It is generally regarded as a fund management company, but of course, it remains debatable if that label is indeed accurate.